Foreword & Acknowledgements

Foreword

Foreword

An embrace of ‘openness’ – to trade and people, to investment and ideas from abroad – has
been the foundation of Britain’s success. Coupled with investment in the UK’s economic
infrastructure and in our education and skills system to prepare the UK for the competition
that comes with openness, this global outlook has served Britain well and increased our
prosperity as a nation.

However, this is the year when the world’s emerging markets – from the Eastern tigers to
the growing powerhouses of Latin America – are set to take over from the developed world as
the majority shareholder in the global economy. Opportunities for Britain to strengthen its
role as a trading nation lie in all corners of the globe. At the same time, the UK’s closest
trading partner, the European Union, is going through a period of extensive structural
change – with an unknown end point – driven by the need to restore stability to the single
currency. Britain must now adapt its open, global approach to reflect the realities of the
21st century.

For business, the nature and characteristics of the complex global economy are the starting
point for taking such long-term strategic decisions. Being successful in today’s global
world is rarely achieved through independent and unilateral action: economies and businesses
from across the globe are increasingly inter-connected, as goods, services, finance and
people – not to mention knowledge and ideas – cross borders ever more rapidly.

For the last 40 years, the UK’s relationship with the European Union has been the
cornerstone of our engagement with this increasingly integrated world. When the UK joined,
Europe was resurgent. Recovered from the Second World War, it seemed clear that the main
opportunities for UK trade and growth were with our nearest neighbours. The current
circumstances have thrown that conclusion into doubt to the point that some in the UK are
questioning the value of our membership of the EU, and some are even advocating withdrawal.

For British business, large and small, the response to this is unequivocal: we should
remain in a reformed EU. Membership of the EU’s Single Market remains fundamental to our
economic future. In this report, the CBI has comprehensively and objectively analysed the
advantages and disadvantages of EU membership and concludes that the EU brings considerable
benefits to the UK in terms of supporting jobs and growth. The EU Single Market is the
biggest in the world, opening up a 500 million-strong consumer market to UK businesses,
allowing capital and investment – as well as people and ideas – to flow into the UK and be
deployed productively across the continent. This has directly boosted the living standards
of UK citizens.

The European Union also supports UK business in realising its global ambitions by providing
significant influence over the rules, policies and priorities that allow British based firms
to seize opportunities across the globe. It anchors UK trade around the world through the
signing of high-quality, ambitious Free Trade Agreements and the creation of globally
recognised standards that open markets. And in a world of competing ideas and ideals – where
international action is increasingly the avenue for addressing problems across the globe –
UK membership of the EU amplifies Britain’s voice internationally.

"

We must set our sights on realising our global future.

However, the EU is far from perfect. Business has frequently criticised many aspects of the
regulations that the UK negotiates in Brussels. While being part of club of 28 countries
inevitably means compromise, there is particular annoyance at the sense of a creeping
extension of EU authority – regulating on trivial issues, sometimes counter to the wishes of
the UK and its citizens, rather than focusing on the big picture issues like growth, trade
and the Single Market.

The wider changes in the global economy means the EU must seize the opportunity to reform
and renew its priorities and purpose in order to keep pace in an increasingly competitive
international context. Business wants a permanent shift in the focus of the EU towards those
issues that will underpin our prosperity in the future. The EU must be more outward-looking
to facilitate new trade opportunities for business. It must be open and competitive,
updating the Single Market for the 21st century and changing its regulatory approach to
drive European competitiveness on the global stage.

The current crisis means that the Eurozone must integrate further but, sitting outside
these moves towards integration, the UK will not be part of this. Safeguarding the Single
Market and protecting the voting rights of those outside the Eurozone is critical. There is
also a historic opportunity to both allow those states that wish to go further to do so but
at the same time set the limits of what is best done in Brussels and what should be left to
the member states themselves.

This reform agenda is achievable. British business is convinced that, by staying in a
reformed EU, the UK can get the best of both worlds – access to markets in Europe and beyond
that build on our innate strengths – our language, time zone, respected legal system and
flexible labour market. And by working with its European partners, the UK can help put the
EU on a path to sustainable growth and global competitiveness – maintaining EU membership as
the cornerstone of the UK’s open posture.

Indeed, at the root of the decision about whether to retain EU membership or not lies a
fundamental choice about this ‘openness’. We should not judge our membership of the EU on
how it measures up against our past, nor by looking at the immediate economic prospects for
the Eurozone, but on what we want our future to look like: open or closed; influential or
uncertain. Deciding our future path is a choice we face imminently, and must make
decisively. Nothing will be given to us for free in the 21st Century. We must set our sights
on realising our global future.

Acknowledgements

The CBI would like to thank everyone who participated in our research discussions,
whether through meetings, consultation events, or the membership survey.

Over 450 CBI member companies and trade associations – including 39 firms from the FTSE 100
– attended consultation events, many at CEO level. The views expressed in the report,
however, are solely those of the CBI.

Particular thanks go to the members of the project steering group, drawn from a range of
CBI members from SMEs to FTSE 100s and based in different regions and with a balanced mix of
UK and foreign-owned companies.

Analysis provided by McKinsey & Company underpins our research. We thank McKinsey for
their support with gathering data and structuring our analysis.

We would also like to thank EY for hosting a series of high-level engagement events where
we invited Chief Executive/Chair level members to attend round-table meetings. Events were
also held in every region of the UK.

Thanks are due to the CBI sectoral committees who offered insight into specific aspects of
the report, for example our financial services, construction and HR members. Our SME members
and trade association members ensured we captured the issues most important to them.

The project team visited Norway, interviewing Norwegian politicians and businesses to
examine how Norway’s relationship with the European Union (EU) works for business. Our
thanks go to the Confederation of Norwegian Enterprise (NHO) for their help with this
element of the research. The CBI project team also met with Swiss stakeholders in Brussels
and we are grateful to those who gave up their time to share their views.

We also arranged international events with our member representatives in Washington,
Beijing, Shanghai, Delhi and Mumbai, and would particularly like to thank the Confederation
of Indian Industry for helping arrange a business breakfast with their members. Similarly,
thanks are due to a number of the CBI’s sister business federations in the EU who attended a
consultation event in Brussels.

We would also like to thank Policy Network, who carried out a series of background
interviews with high-level European decision-makers on behalf of the CBI, providing us with
an overview of our European partners’ attitudes to the current state of play on economic and
institutional reform in Europe, paying particular attention to the future prospects for the
European Single Market in the aftermath of the 2008 financial crisis.

Finally, we invited a group of leading academics and think tank directors to form a panel
to challenge our findings, and we would like to thank them for their constructive criticism.

Challenge Panel

Mr Charles Grant, Director, Centre for European Reform

Dr Robin Niblett, Director, Chatham House

Prof. Anand Menon, Professor of European Politics and Foreign Affairs,
King’s College London

Prof. Andrew Scott, Professor of Economics, London Business School

Mr Maurice Fraser, Professor of Practice in European Politics,
London School of Economics (LSE)